Real estate, insurance companies must submit agents’ income data to Iras, under MOF proposal

IT MAY become compulsory for real estate and insurance companies to submit agents’ commission income data directly to the tax authority from 2024, if a proposal by the Ministry of Finance (MOF) goes through.

In a consultation paper released earlier this month, MOF proposed that it become mandatory for intermediary companies to submit self-employed persons’ (SEPs) income information directly to the Inland Revenue Authority of Singapore (Iras).

“This will facilitate the income tax assessment of SEPs, as well as the administration of schemes that cover SEPs such as the Workfare Income Supplement,” MOF said in its consultation paper, which was posted on the government feedback portal Reach.

It will also allow the government to roll out SEP schemes “more quickly and effectively”, the ministry added.

The change will begin from the 2024 year of assessment, and first apply to commission-paying organisations such as those in the real estate and insurance sectors, an MOF spokesperson told The Business Times (BT).

The requirement will then be extended to other intermediaries in phases – including platform companies such as Grab and Foodpanda, and taxi operator ComfortDelGro. Iras is engaging such companies to “understand their needs and work closely with them in the onboarding process”, the MOF spokesperson said.

It is currently still optional for companies to submit SEPs’ income data to Iras, although the tax authority has introduced several measures encouraging them to do so.

Iras announced the e-Submission of Commission Income Scheme in 2015, allowing agents at commission-paying companies to have their income data pre-filled for tax purposes. Some 110 companies joined the scheme at the time. In 2018 and 2019, Iras extended the pre-filling initiative to private-hire car and taxi operators on a voluntary basis.

Under MOF’s new proposal, companies will no longer have a choice in submitting their SEPs’ earnings data. Industry players BT spoke to were sanguine about the change.

“This is a good proposal as it removes the hassle of SEPs having to input their tax submission and ensures accuracy,” said Marcus Chu, chief executive of ERA Singapore and ERA Asia-Pacific. The agency has been submitting its salespersons’ income data to Iras since 2008.

Micah Lim, a real estate salesperson with JKL Consultants, said it was only a matter of time before the income data submission became mandatory. He expects little impact on the industry, given how many agencies are already on board the pre-filling scheme.

“This makes a lot of sense. It simplifies tax collection (for) Iras and improves the accuracy of income declaration. SEPs have reduced workload… and fewer concerns about wrong declarations,” he said.

This means that “everyone wins”, except the companies that have to do more paperwork. SEPs will just need to be mindful to double-check the submitted data.

An insurance agent who spoke to BT believes most of his peers understand the risks of not declaring their income correctly to Iras, especially the penalties involved. “Hence, with or without this change, they will still declare their income correctly,” said the agent, who requested anonymity.

Even with this change, he added, agents will still need to be responsible for declaring their business expenses correctly in the tax filing.

MOF’s proposal is part of 33 legislative amendments to the Income Tax Act that the ministry is seeking public feedback on, including changes announced in this year’s Budget. The public can provide feedback on the consultation paper by Jun 30.